The banking and securities sector in India continues to increase its investments in digital business. Its spending on IT in India will total $11 billion in 2020, an increase of 9.1% from 2019, according to the latest forecast by Gartner, Inc.
Banking and securities organizations are investing in emerging digital technologies, such as artificial intelligence (AI) and blockchain, not only to create new product offerings but also to respond to evolving customer demands. “As an example, the transition to a cashless society aided by newer digital payment channels is creating opportunities for new digital technology investments in the sector,” said Ali Merji, senior research director at Gartner.
Respondents to the 2019 global Gartner CIO Survey identified AI and Machine Learning as the number one game-changing technology at 27% followed by Data Analytics, including predictive analytics at 20%. “CIOs in this sector continue to adopt digital technologies that will improve existing products and services. Technologies such as biometric authentication, machine learning, chatbots are increasingly preferred by CIOs to deliver an enhanced user experience and enable digitalization of the sector,” said Mr. Merji.
Biometrics and Automation Boost IT Spending
According to Gartner’s “Hype Cycle for Digital Banking Transformation, 2019,” biometric technology will impact up to 20% of banking organizations in the next two to five years. “In India, biometric technology adoption saw a boost after the introduction of Aadhaar, a unique 12-digit identification number that links citizens’ bank accounts to their biometric data and mobile numbers,” added Mr. Merji. Biometric authentication such as touch ID is a common way of using passwordless authentication and is widely deployed in mobile banking.
“Biometrics eliminates the hassle of remembering passwords and makes the banking experience more secure and seamless. This is one of the key factors that influenced 83% of surveyed global CIOs in the banking and securities sector to indicate that they will continue investing in biometrics with either the same level of investment or by going beyond the current level in the next two years,” said Mr. Merji. “Seven in 10 Indian Financial Services firms are actively experimenting with biometrics or have already deployed it in their organization in some capacity.”
According to the 2019 Gartner CIO Survey, technology leaders in banking place a higher priority on legacy modernization than do technology leaders in other industries. While user-facing digitalization efforts are critical to delivering a complete digital experience to customers, digitalization of internal processes is necessary to support this initiative. Gartner says that of the total technology investments being made in the Indian banking sector, 23% are for digitalization of internal services. This investment is expected to grow by 9% over the next two years.
“One of the critical challenges that troubles Indian banking and securities CIOs is connecting legacy digital systems to modern IT setups without interrupting the flow of data,” said Mr. Merji. “In a bank, customer data moves across multiple departments for even the simplest of processes, such as opening a new bank account. Automation of these back-office processes can reduce the response time, ensure data continuity and secure data transfers, and at the same time deliver an enhanced user experience.”